Hamas said it fired long-range a rocket towards Jerusalem from Gaza, which
exploded near an Israeli settlement in the West Bank.

It is not clear if Jerusalem was the intended target of the rocket. The Israeli police confirmed the incident, which led to air raid sirens being heard across the ancient city. The firing of the rocket is likely to increase the pressure on Benjamin Netanyahu, the Israeli prime minister, to launch a ground offensive into Gaza to remove the threat posed by a missile stockpile in Gaza estimated at 10,000.

Hamas and other militants have continued to fire into Israel, despite a barrage that began on Wednesday by claiming the life of Ahmed al-Jaabari, the leader of the organisation's militant wing.

The distance the rocket travelled suggested it was an Iranian-made Fajr-5, which has a range of 50 miles. Early reports said it landed on open land near Gush Etzion, an Israeli settlement in the West Bank ten miles southwest of Jerusalem. No injuries or damage were reported.

Earlier in the day, Egypt tried to open a window to emergency peace diplomacy in Gaza, but even an attempted three-hour ceasefire failed to hold while its prime minister was inside the bombarded enclave to talk to leaders of Hamas.

Prime Minister Hisham Kandil visited the Gaza Strip on Friday officially to show solidarity with the Palestinian people after two days of relentless attacks by Israeli warplanes determined to end militant rocket fire at Israel.

Mr Kandil said: "Egypt will spare no effort ... to stop the aggression and to achieve a truce." But he condemned the Israeli attacks as a "disaster" and said Israel's aggression must stop. The Israeli military struck at 130 targets in Gaza overnight.

Israel undertook to cease fire during the visit if Hamas stopped rocket fire on southern Israel. But the Israeli Defence Force said rockets fired from Gaza had hit several sites in southern Israel even as the Egyptian prime minister was in the enclave.

According to a Hamas source, the Israeli air force launched an attack on the house of Hamas's commander for southern Gaza which resulted in the death of two civilians, one a child.

Israel's military strongly denied carrying out any attacks from the time Kandil entered Gaza, and accused Hamas of violating the three-hour deal. "Israel has not attacked in Gaza for the past two hours," a spokesman said.

"Even though about 50 rockets have fallen in Israel over the past two hours, we chose not to attack in Gaza due to the visit of the Egyptian prime minister. Hamas is lying and reporting otherwise," the army said in a Twitter message.

As the visit went ahead air raid sirens sounded in Tel Aviv and an explosion was heard, witnesses said. Hamas militants in the Gaza claimed they had fired a rocket at Israel's commercial centre.

Sirens were later heard in Jerusalem with claims from Hamas that they had fired a Qassam rocket at the city. However there were no immediate reports of explosions or casualties.

A police spokesman acknowledged an explosion had been heard but said there was no initial indication a rocket had struck the city nor any immediate reports of casualties or damage.

Palestinian militants in Gaza launched two rockets toward the city on Thursday. One fell in the sea, a security source said, and the other landed in a Tel Aviv suburb, causing no damage or casualties.

It was the first time Israel's biggest city had been alerted by air raid sirens since the 1991 Gulf War.

Hassan Nasrallah, the head of the Lebanese group Hezbollah, said the targetting of Israel's commercial centre was a "very significant development" in the conflict with the Jewish state.

"The firing of Fajr 5 rockets on Tel Aviv today shows the maturation, the wisdom and strength, and the courage of the Palestinian resistance in the Gaza Strip," Nasrallah said in a speech on Thursday night.

"The Israeli enemy was surprised and forced to acknowledge that its capital had been hit," said the leader of Lebanon's most powerful military force, adding that the Iranian-made rockets have a range of 44 miles.

The threat to Tel Aviv contributed to Israel's decision to mobilise troops on its border with Gaza.

At least a dozen trucks carrying tanks and armoured vehicles were seen moving toward the border area, while buses ferried soldiers, as Israeli forces moved closer to a ground war against the radical Islamist group Hamas.

Ehud Barak, the Israeli defence minister, also approved the call-up of 30,000 reservists as the confrontation intensified.

The two rockets fell just short of Tel Aviv, the furthest they have ever reached inside Israel. One hit the town of Rishon Lezion, seven miles away, while a second, an Iranian Fajr-5 missile, fell into the sea off the coast of Jaffa, just to the south of the city.

It was the first attempted attack on Tel Aviv since the Gulf War in 1991. Air raid sirens sounded in the city for the first time in 20 years and sent residents running for shelters. Israeli officials had earlier indicated a strike against Tel Aviv would be a “red line” which could trigger a ground war.

“This escalation will exact a price that the other side will have to pay,” Mr Barak warned last night in the wake of the rocket attacks.

Tel Aviv had until recently been thought to be out of missile range for Gaza’s militant groups.

Both were claimed by Islamic Jihad, a more radical group separate from Hamas, which has political control over Gaza. But Israeli leaders gave no sign of recognising that distinction, regarding any attack on its territory as a legitimate cause for retaliation.

Benjamin Netanyahu, the Israeli prime minister, was buoyed by support from Western leaders including President Barack Obama and the foreign secretary, William Hague.

He also spoke to an "extremely concerned" David Cameron by telephone on Thursday night.

He gave an unrepentant defence of the decision to launch Wednesday and Thursday’s attacks on Gaza, which killed Hamas’s military leader Ahmed al-Jaabari.

“Israel will continue to take whatever action is necessary to defend our people,” he said. Officials last night however, said that no decision had yet been made to enter Gaza.

The risks to wider regional security, particularly in light of the Arab Spring revolutions, were emphasised by an angry response in Egypt to Israel’s attack.

Egypt’s prime minister, Hisham Qandil, announced he would lead a delegation to Gaza on Friday, the highest profile visit by an Egyptian leader since the Muslim Brotherhood took power earlier this year.

Egypt brokered an informal truce between Hamas and Israel on Monday, which Israel’s attack two days later brought to an end.

But Hamas, backed also by other Arab nations including the key western ally of Qatar, said it rejected all talk of a truce “at this time”.

So far, 19 Palestinians, including both militants and civilian men, women and children, have been killed by Israeli air strikes, while three Israeli civilians died when a rocket fired from Gaza hit their apartment block in the southern Israeli town of Kiryat Malachi yesterday morning.

As plumes of smoke rose above Gaza and southern Israel, the United States showed its alarm that a new Middle East war could break out even as a newly re-elected President Barack Obama deals with crises over Iran, Syria and other nations engulfed in the Arab Spring revolutions.

Last night he called on Egypt, whose new Muslim Brotherhood leaders he recently called neither a friend nor an enemy, to help. “We ask Egypt to use its influence in the region to help de-escalate the situation,” a state department spokesman said.